Oil prices rose today as investors bet OPEC and its allies would largely agree to extend their supply curbs into May, while strong growth in China's manufacturing activity this month sent out more signals of economic recovery.
Brent crude futures for May, which expires today, rose 46 cents, or 0.7%, to $64.60 a barrel this morning, after falling 1.3% yesterday.
The more active Brent contract for June was up 52 cents, or 0.8%, at $64.69 a barrel.
The benchmark has shed more than 2% so far this month, compared with a 18% rise in February.
US West Texas Intermediate (WTI) crude futures climbed 51 cents, or 0.8%, to $61.06 a barrel, after falling 1.6% in the previous session.
"Oil prices appear to be underpinned by upbeat Chinese Purchasing Manager's Index data from the National Bureau of Statistics, which underscored the growth momentum of the world's second-largest economy," said Margaret Yang, from Singapore's DailyFX.
"Against the backdrop of lowered energy demand in Europe due to a third viral wave, OPEC+ and its allies are likely to extend the current production cut into May until the growth prospects show signs of improvement," she added.
China's manufacturing activity expanded at the quickest pace in three months in March as factories cranked up production after a brief lull during the Lunar New Year holidays.
But OPEC+ has raised concerns that rising numbers of coronavirus infections globally and lockdown measures will impact the recovery in demand for oil, according to a report from the group's experts panel meeting seen by Reuters.
The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, are set to meet tomorrow, following a month in which oil prices have whipsawed on concerns about extended pandemic lockdowns in Europe, slow vaccine rollouts and rising Covid-19 cases in India and Brazil, pitted against growing optimism on growth in the US.
OPEC+ last month surprised the market by agreeing to extend supply curbs, with small exceptions for Russia and Kazakhstan, at a time when fuel demand appeared to be recovering.
Under existing curbs, OPEC, led by Saudi Arabia, and non-OPEC producers, led by Russia, have cut just over 7 million barrels per day (bpd), while Saudi Arabia has made an additional voluntary reduction of 1 million bpd.
Saudi Arabia is prepared to back an extension of the supply cuts into June, including its own voluntary cut, to boost prices, a source briefed on the matter told Reuters this week.
